Challenger Gold has completed a Pre-Feasibility Study for toll milling at its Hualilan Gold Project in Argentina, revealing strong economics with low upfront capital and rapid payback. The company also secured A$37.5 million in equity funding to advance development and strengthened legal protections for its Ecuador projects.
- Hualilan Toll Milling PFS shows EBITDA of US$88M at conservative prices
- Low upfront capital of US$8.9M with payback expected within three months of mining start
- A$37.5 million equity placement funds development through first cash flow
- Heap leach metallurgical testwork indicates up to 85% gold recovery on low-grade ore
- Investment Protection Agreement executed with Ecuador government for El Guayabo Project
Strong Economics from Toll Milling at Hualilan
Challenger Gold Limited has released a comprehensive quarterly activities report highlighting the completion of a Pre-Feasibility Study (PFS) for toll milling at its 100%-owned Hualilan Gold Project in San Juan, Argentina. The study demonstrates robust project economics, with an EBITDA of US$88 million based on conservative gold and silver prices of US$2,500/oz and US$27.50/oz respectively. At current spot prices near US$3,300/oz gold, EBITDA rises significantly to US$142.8 million, underscoring strong leverage to commodity prices.
The project benefits from a low upfront capital requirement of just US$8.9 million, split between US$4.2 million in capital expenditure and US$4.7 million in working capital. This modest initial investment supports a rapid payback period, expected within three months of mining commencement in September 2025, with first cash flow anticipated by December 2025.
Operational and Financial Readiness
Challenger has secured firm commitments for an approximately A$37.5 million equity placement, providing a comfortable funding buffer to advance the toll milling operation through to first cash flow. The proceeds will also accelerate drilling and studies for an expanded standalone Life of Mine (LOM) development at Hualilan, with a targeted PFS release in early 2026.
The toll milling operation will process approximately 450,000 wet metric tonnes of ore over three years at the Casposo process plant, owned by Austral Gold Limited. The processing method combines gravity recovery with cyanide leaching, achieving forecast all-in sustaining costs (AISC) of around US$1,454 per gold equivalent ounce, well below current spot prices.
Promising Metallurgical Testwork and Heap Leach Potential
Metallurgical testwork has delivered encouraging results, particularly for heap leaching of the significant low-grade mineralised halo surrounding the high-grade core at Hualilan. Column leach tests have demonstrated gold recoveries up to 85%, with average recoveries around 75%, which is outstanding on a global scale. Notably, strong recoveries were achieved even at very low grades, such as 67.2% recovery from material grading just 0.15 g/t gold.
This breakthrough opens the possibility of economically processing material previously considered waste, potentially transforming the project’s scale and economics. The company is advancing an upsized standalone Life of Mine PFS incorporating these findings, with final metallurgical testwork on track for completion in the coming months.
Strategic Progress in Ecuador
Beyond Argentina, Challenger Gold has executed an Investment Protection Agreement (IPA) with the Government of Ecuador for its 100% owned El Guayabo Project. The IPA provides legal protections including regulatory stability, dispute resolution through international arbitration, and safeguards for the company’s investment. This agreement is timely, following a recent doubling of the Mineral Resource Estimate at the Ecuador projects to 9.1 million ounces gold equivalent, positioning them as significant undeveloped assets in South America.
The report also notes regional corporate activity, including the acquisition of Lumina Gold Corp by CMOC Group Limited for A$650 million. Lumina’s adjacent Cangrejos project shares geological similarities with Challenger’s Ecuador assets, underscoring the district’s potential and providing a valuation benchmark for Challenger’s projects.
Corporate and Governance Updates
Challenger Gold announced the appointment of Carolina Zang, a highly respected Argentine business leader and securities lawyer, as a Non-Executive Director. Her expertise is expected to strengthen the company’s governance and stakeholder engagement, particularly in Argentina.
Exploration and corporate expenditures remain disciplined, with a focus on advancing the toll milling readiness and the standalone PFS. The company maintains a strong cash position, including proceeds from the equity placement, to support ongoing development and corporate activities.
Bottom Line?
Challenger Gold’s strong toll milling economics and secured funding set the stage for rapid development, while promising heap leach results and Ecuadorian legal protections hint at substantial future growth opportunities.
Questions in the middle?
- How will the upcoming standalone Life of Mine PFS impact the overall project valuation and development timeline?
- What are the potential risks related to commodity price fluctuations and exchange rates on the project’s economics?
- How might regional corporate transactions in Ecuador influence Challenger Gold’s strategic options for its assets?